Nuclear Power Plants
With Felix Oberholzer-Gee, in the Public Choice publication also with Iris Bohnet, in Journal of Political Economy also with Reiner Eichenberger BSF participated in a study on compensation payments for local disamenities, in this example a nuclear waste repository. He edited, with changing co-authors, at least four papers on the topic, some of them in the top five economic journals Journal of Political Economy and American Economic Review. The main table in the four papers at first sight looks identical. Titles are mostly identical, and even column/row labels are mostly similar. But, stunningly, estimated coefficients differ! 1 American Economic Review 1997 (does not cite Journal of Political Economy 1996): : "Economists have a handy tool for solving NIMBY problems. As the aggregate net benefits of undertaking the project are positive, one must simply redistribute them in an appropriate way. Economic theory suggests that communities can be induced to accept the undesired project by compensating them in such a way as to make their net benefits positive, while all other communities must be taxed to raise the sum of compensation." 1 JPE 1996 (does not cite American Economic Review 1997): : “Economists have devised handy tools to deal with NIMBY problems. As the aggregate net benefits of undertaking these projects are positive, one must simply redistribute them in an appropriate way. Host communities must be compensated to make their net benefits positive, and everyone else is taxed to raise the sum of compensation.” 2 AER: : “The procedure described in the question is identical to the one actually employed in Switzerland. In order to build a repository, the developer (NAGRA), the federal parliament, and the local town hall meeting all have to agree on the project.” (p. 749, FN No. 6) 2 JPE: : “The procedure we described was identical to the one actually employed in Switzerland. In order to build a repository, the developer, the federal parliament, and the local town hall meeting all have to agree on the project.“ 3 AER: : “Table I reports the results of a binary logit analysis which seeks to explain why individuals accept a nuclear waste facility. The dependent response are "accept" answers. Those who did not care about the construction of a nuclear waste repository were omitted from the analysis. The predictive power of our model (column I, without compensation) is quite satisfactory. Eighty percent of all answers are predicted correctly. The results of the binary logit analysis correspond to our theoretical expectations and previous empirical findings. Higher perceived risk, negative economic impacts, and ownership of a home all decrease the willingness to host a nuclear waste repository. This refutes the notion that individuals do not act rationally when confronted with nuclear waste facilities. The costs a facility imposes on its immediate neighbors largely explain their resistance. 15 Personal characteristics such as political orientation, income, age, education, and sex do not exercise any significant influence. As does earlier siting research, we also find that the general support for nuclear energy and the quality of the site selection procedure positively influence the willingness to accept the repository.” (p 751, 3rd & 4th paragraph) 3 JPE: : “The dependent response of the estimates is supportive votes. Those who did not care about the construction of a nuclear waste repository were omitted from the analysis. The results of the binary logit analysis correspond to our theoretical expectations. Higher perceived risks, negative economic impacts, and ownership of a home all significantly decreased the willingness to host a nuclear waste repository. Personal characteristics did not exercise any significant influence. The variables linked to civic duty point to a sizable effect of this type of intrinsic motivation. Respondents who support the Swiss nuclear program refrain from freeriding when it comes to sharing the burden associated with this technology: They exhibit an 11.4-percentage-point higher probability of accepting the waste repository.” 4 AER : “We measured the degree of support for nuclear energy by asking respondents how they would vote in a national referendum on a proposition which demanded to stop producing nuclear energy. Such a propositidn was actually put to a national referendum in 1990 and was narrowly defeated.” (p. 751, fn 13) 4 JPE : “We measured the degree of support for nuclear energy by asking respondents how they would vote on a proposition that demanded an end to the production of nuclear energy. Such a proposition was narrowly defeated in a national referendum in 1990.” 5 AER : “To test the effect of external compensation, we repeated the exact same question asking our respondents whether they were willing to accept the construction of a nuclear waste repository when the Swiss parliament had decided to compensate all residents of the host community (Question 2, Appendix). The amount offered varied from $2,175 per individual and year (N = 117) to $4,350 (N = 102) and $6,525 (N= 86).” (p.749, 3rd paragrah) 5. JPE : “Effects of Compensation. To test our hypotheses, we repeated the exact same question, asking our respondents whether they were willing to accept the construction of a nuclear waste repository if the Swiss parliament decided to compensate all residents of the host community. The amount offered for the lifetime of the facility was varied from $2,175 per individual and year (N = 117) to $4,350 (N = 102) and $6,525 (N = 86).” 6 AER : “The compensation offered here is quite substantial. Median household income for our respondents is $4,565 per month. Everyone who rejected the first compensation was then made a better offer, thereby raising the amount of compensation from $2,175 to $3,263, from $4,350 to $6,525, and from $6,525 to $8,700. Despite this marked increase, only a single respondent who declined the first compensation was now prepared to accept the higher offer.” (p. 749, FN No. 8) 6. JPE : “The compensation offered here is quite substantial: median household income for our respondents is $4,565 per month. In order to corroborate this result, we offered increases in compensation (from $2,175 to $3,263, from $4,350 to $6,525, and from $6,525 to $8,700) to all those who had declined the initial proposal. Again, the rate of acceptance did not change significantly. Only a single person switched to the supporting camp.” 7 AER : “These findings are not unique to Switzerland. Kunreuther and Easterling ( 1990) report that increased tax rebates failed to elicit increased support for a nuclear waste facility in Nevada (N = 498). They reject the possibility that the rebates offered were simply too small. Similar results concerning nuclear waste repositories are reported by S. A. Carnes et al. 1(1983) for Wisconsin (N = 420), by Riley E. Dunlap and Rodney K. Baxter (1988) for Washington State (N = 658), and by Eric Herzik (1993) for Nevada (N = 1212).” (p. 750, 3rd paragraph) 7 JPE : “The bribe and the crowding-out effects are not unique Swiss phenomena. Kunreuther and Easterling (1990) found that increased tax rebates failed to elicit increased support for a nuclear waste facility in Nevada. Further results that are consistent with the hypotheses advanced above are reported by Carnes et al. (1983) for Wisconsin, by Dunlap and Baxter (1988) for Washington State, and by Herzik (1993) for Nevada.” 8 AER : “Strategic Behavior. Since our observations relate to a real-world problem, we cannot rule out that the respondents answered strategically. In order to maximize the amount of compensation received from the central government, the citizens would understate their willingness to accept the repository. In this case, opposition should be greatest when no compensation was offered. This is just the opposite of what actually occurred. Furthermore, when asked why they declined the compensation offered, only 4.9 percent of the respondents indicated that the amount was insufficient to win their approval (Question 3 (a), Appendix)." Therefore, strategic behavior can be ruled out for the majority of the respondents.” (p. 750, 5th paragraph) 8. JPE : “Strategic Behavior. One might argue that the observed price inelasticity is the result of strategic behavior. According to this view, respondents hope to be compensated even more generously when rejecting initial offers of compensation. However, this argument fails to explain the high initial approval of the facility without compensation and the fact that increases in monetary rewards had absolutely no influence on support. Moreover, when asked why they declined the compensation offered, only 4.9 percent of all respondents indicated that the financial incentives provided were insufficient. These statements are incompatible with the hypothesis of strategic behavior.” Literature Frey, Bruno S., Felix Oberholzer-Gee (1996). "Fair siting procedures: An empirical analysis of their importance and characteristics." Journal of Policy Analysis and Management 15(3), p. 353–376. Frey, Bruno S., Felix Oberholzer-Gee, and Reiner Eichenberger (1996). "The Old Lady Visits Your Backyard: A Tale of Morals and Markets." Journal of Political Economy 104(6), p. 1297-1313. Frey, Bruno S., and Felix Oberholzer-Gee (1997). "The Cost of Price Incentives: An Empirical Analysis of Motivation Crowding-Out." American Economic Review 87(4), p. 746-755. Felix Oberholzer-Gee, Iris Bohnet und Bruno S. Frey (1997). "Fairness and competence in democratic decisions." Public Choice 91(1), p. 89-105. DOI: 10.1023/A:1004933219501